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Guidelines on the effect on trade concept
The concept of "effect on trade" is the ground of jurisdiction which determines whether the European Union (EU) competition rules apply. It is particularly important in the new system for applying the rules, which obliges national courts and competition authorities to apply the EU competition rules to all agreements and practices capable of affecting trade between EU countries. In this context, the guidelines summarise the copious case law of the EU courts and clarify the application of the rules for the implementing authorities and undertakings.
Commission notice – Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty [Official Journal C 101 of 27.4.2004].
Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) (ex-Articles 81 and 82 of the Treaty Establishing the European Community (TEC)) are applicable to horizontal and vertical agreements and practices on the part of undertakings which may affect trade between European Union (EU) countries.
The present guidelines spell out a rule indicating when agreements are in general unlikely to be capable of appreciably affecting trade between EU countries. They are not intended to be exhaustive. The aim is to set out the methodology for the application of the effect on trade concept and to provide guidance on its application in frequently occurring situations. Although not binding on them, these guidelines also intend to give guidance to the courts and authorities of the EU countries in their application of the effect on trade concept contained in Articles 101 and 102 TFEU.
The effect on trade criterion confines the scope of application of Articles 101 and 102 TFEU to agreements and practices that are capable of having a minimum level of cross-border effects within the EU.
In the case of Article 101 TFEU, it is the agreement that must be capable of affecting trade between EU countries. If the agreement as a whole is capable of affecting trade between EU countries, there is EU law jurisdiction in respect of the entire agreement, including any parts of the agreement that individually do not affect trade between EU countries. In cases where the contractual relations between the same parties cover several activities, these activities must, in order to form part of the same agreement, be directly linked and form an integral part of the same overall business arrangement. If not, each activity constitutes a separate agreement.
In the case of Article 102 TFEU, it is the abuse that must affect trade between EU countries. This does not imply, however, that each element of the behaviour must be assessed in isolation. Conduct that forms part of an overall strategy pursued by the dominant undertaking must be assessed in terms of its overall impact. Where a dominant undertaking adopts various practices in pursuit of the same aim, for instance practices that aim at eliminating or foreclosing competitors, in order for Article 102 TFEU to be applicable to all the practices forming part of this overall strategy, it is sufficient that at least one of these practices is capable of affecting trade between EU countries.
Analysis of the concept of affecting trade requires that three aspects in particular be addressed:
- the concept of "trade between EU countries": the concept of "trade" is not limited to traditional exchanges of goods and services across borders. It is a wider concept, covering all cross-border economic activity including establishment. This interpretation is consistent with the fundamental objective of the Treaty to promote free movement of goods, services, persons and capital. The requirement that there must be an effect on trade "between EU countries" implies that there must be an impact on cross-border economic activity involving at least two EU countries;
- the notion "may affect": the function of the notion "may affect" is to define the nature of the required impact on trade between EU countries. According to the standard test developed by the Court of Justice, the notion "may affect" implies that it must be possible to foresee with a sufficient degree of probability on the basis of a set of objective factors of law or fact that the agreement or practice may have an influence, direct or indirect, actual or potential, on the pattern of trade between EU countries. In cases where the agreement or practice is liable to affect the competitive structure inside the EU, EU law jurisdiction is established;
the concept of "appreciability": the effect on trade criterion incorporates a quantitative element, limiting EU law jurisdiction to agreements and practices that are capable of having effects of a certain magnitude. Appreciability can be appraised in particular by reference to the position and the importance of the relevant undertakings on the market for the products concerned. The assessment of appreciability depends on the circumstances of each individual case, in particular the nature of the agreement and practice, the nature of the products covered and the market position of the undertakings concerned. In its notice on agreements of minor importance, the Commission states that agreements between small and medium-sized enterprises rarely affect trade between EU countries to a significant degree. The Commission holds the view that in principle agreements are not capable of appreciably affecting trade between EU countries when the following cumulative conditions are met:
- the aggregate market share of the parties on any relevant market within the EU affected by the agreement does not exceed 5 %;
- in the case of horizontal agreements, the aggregate annual EU turnover of the undertakings concerned in the products covered by the agreement does not exceed EUR 40 million.
The threshold of EUR 40 million is calculated on the basis of total EU sales excluding tax during the previous financial year by the undertakings concerned, of the products covered by the agreement (the contract products). Sales between entities that form part of the same undertaking are excluded. In order to apply the market share threshold, it is necessary to determine the relevant market.
The Commission will apply the negative presumption to the application of the concept of affecting trade to all agreements, including agreements that by their very nature are capable of affecting trade between EU countries as well as agreements that involve trade with undertakings located in non-EU countries. Outside the scope of negative presumption, the Commission will take account of qualitative elements relating to the nature of the agreement or practice and the nature of the products that they concern.
The positive presumption relating to appreciability in the case of agreements also takes into account whether and how agreements and practices cover several EU countries, whether they are confined to a single EU country or to part of a single EU country. Agreements and practices involving non-EU countries are also dealt with. In the case of agreements and practices whose object is not to restrict competition inside the EU, it is normally necessary to proceed with a more detailed analysis of whether or not cross-border economic activity inside the EU, and thus patterns of trade between EU countries, are capable of being affected.